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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB/A

Amendment No. 3

(Mark One)



|þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2006



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|- | ---------------------------------------------------------------------

For the transition period from  to

Commission
file number 000-28739

Satellite Security Corporation

(Exact name of small business issuer as specified in its charter)



|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Nevada                                                         |  | 91-1903590                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)

6779 Mesa Ridge Road, Suite 100

San Diego, California 92121

(Address of principal executive offices,

including zip code)

(877) 437-4199

(Issuers telephone number,

including area code)

Celtron International, Inc.

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES  þ    NO ̈

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ̈NO  þ

On May 8, 2006, the registrant had outstanding 98,056,563 shares of Common Stock, which is the registrants only class of common equity.

Transitional Small Business Disclosure Format (Check One) YES ̈NO  þ



---



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EXPLANATORY NOTE

We filed our Quarterly Report on Form 10-QSB for the period ended March 31, 2006 on May 22, 2006 (the Original Filing). At that time, we reported that because of accounting issues related to our
newly acquired subsidiary Satellite Security Systems, Inc. we did not have the historical financial statement information necessary to provide period to period comparisons of financial results. On July 13, 2006, we filed an amendment on Form
10-QSB/A (the First Amendment) to include the historical financial information. On August 10, 2006 we filed an amendment on Form 10-QSB/A (the Second Amendment) to correct an understatement of interest expense associated
with a beneficial conversion feature recognized in connection with the issuance of a Convertible Promissory Note (the Note) to the Aston Organization, Ltd.

We are filing this amendment (the Third Amendment) to:



| |  |  | further correct the accounting treatment associated with the beneficial conversion feature of the Note, and
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | revise managements assessment concerning effectiveness of the design and operation of our disclosure controls.
| | - |  | ---------------------------------------------------------------------------------------------------------------

In the Original Filing, First Amendment and Second Amendment, we incorrectly calculated our interest expense for the period ended March 31, 2006 on
the basis of the full amortization of the beneficial conversion feature associated with any advances made under the Note during the period. In accordance with generally accepted accounting principals, the beneficial conversion feature should have
been amortized through December 31, 2006, the maturity date of the Note. We have now recalculated the interest expense during the period based on the amortization of the beneficial conversion feature through December 31, 2006, which
resulted in a reduction of interest expense of $650,255 on our statement of operations for the period. We have also booked an unamortized discount of $650,255 as contra liability on the balance sheet.

In the Original Filing and the First Amendment, our discussion of our disclosure controls included an assessment by our Chief Executive Officer and our
Chief Financial Officer that the design and operation of our disclosure controls were effective as of March 31, 2006. We are revising that disclosure to state that the design and operation of our disclosure controls and procedures were not
effective as of March 31, 2006, due to certain material weaknesses over internal control of financial reporting.

This Quarterly
Report on Form 10-QSB/A amends and restates Item 1. Financial Statements, Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations and Item 3. Controls and Procedures of
the Original Filing as amended by the First Amendment and the Second Amendment, solely as a result of, and to reflect, the impact of the items discussed in this Explanatory Note.

Pursuant to the rules of the Securities and Exchange Commission, we have included currently-dated certifications from our principal executive officer and
principal financial officer, as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. Except as otherwise specifically noted, all information contained herein is as of March 31, 2006 and does not reflect events or changes that
have occurred subsequent to that date.



2



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|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

Satellite Security
Corporation and Subsidiary

Unaudited Condensed Consolidated Balance Sheet



|                                                                        |  |                |            |  
|----------------------------------------------------------------------- |  | -------------- | ---------- | -
|                                                                        |  | March 31, 2006 |           
|Assets                                                                  |  |                |            |  
|Current Assets                                                          |  |                |            |  
|Accounts receivable, net of allowance for doubtful accounts of $199,495 |  | $              | 109,850    |  
|Inventory, net                                                          |  |                | 52,116     |  
|Deposit on Inventory                                                    |  |                | 48,000     |  
|Other current assets                                                    |  |                | 9,218      |  
|                                                                        |  |                |            |  
|Total Current Assets                                                    |  |                | 219,184    |  
|                                                                        |  |                |            |  
|Property and equipment, net of accumulated depreciation                 |  |                | 208,294    |  
|                                                                        |  |                |            |  
|Other Assets                                                            |  |                |            |  
|Restricted cash for letter of credit                                    |  |                | 75,000     |  
|                                                                        |  |                |            |  
|                                                                        |  |                | 75,000     |  
|Total Assets                                                            |  | $              | 502,478    |  
|                                                                        |  |                |            |  
|Liabilities and Shareholders Deficiency                                |  |                |            |  
|Current Liabilities                                                     |  |                |            |  
|Cash overdraft payable                                                  |  | $              | 1,788      |  
|Accounts payable                                                        |  |                | 550,950    |  
|Accrued expenses                                                        |  |                | 486,927    |  
|Deferred revenue - current portion                                      |  |                | 112,363    |  
|Current portion of long-term debt                                       |  |                | 20,213     |  
|Notes and Loan payable to related parties                               |  |                | 439,885    |  
|Current maturities of long-term debt - related party                    |  |                | 47,850     |  
|                                                                        |  |                |            |  
|Total Current Liabilities                                               |  |                | 1,659,976  |  
|                                                                        |  |                |            |  
|Non-Current Liabilities                                                 |  |                |            |  
|Long-term debt-related party, net of current maturities                 |  |                | 1,043,440  |  
|Long-term debt                                                          |  |                | 19,476     |  
|Deferred revenue, net of current portion                                |  |                | 344,854    |  
|                                                                        |  |                |            |  
|Total Non-Current Liabilities                                           |  |                | 1,407,770  |  
|                                                                        |  |                |            |  
|Total Liabilities                                                       |  |                | 3,067,746  |  
|                                                                        |  |                |            |  
|Commitments and Contingencies                                           |  |                |            |  
|Shareholders Deficiency                                                |  |                |            |  
|Common stock, $0.001 par value                                          |  |                |            |  
|Authorized - 250,000,000 shares                                         |  |                |            |  
|Issued and outstanding  98,056,563 shares                              |  |                | 98,057     |  
|Additional paid in capital                                              |  |                | 5,064,488  |  
|Retained deficit                                                        |  |                | (7,727,813 | )
|                                                                        |  |                |            |  
|Total Shareholders Deficiency                                          |  |                | (2,565,268 | )
|                                                                        |  |                |            |  
|Total Liabilities and Shareholders Deficiency                          |  | $              | 502,478    |  
|                                                                        |  |                |            |  

The accompanying notes are an integral part of these financial statements



3



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Satellite Security Corporation and Subsidiary

Unaudited Condensed Consolidated Statements of Operations



|                                           |  |                              |            |   |                              |   |            |  
|------------------------------------------ |  | ---------------------------- | ---------- | - | ---------------------------- | - | ---------- | -
|                                           |  | 3 months endedMarch 31, 2006 |            |   | 3 months endedMarch 31, 2005 |  
|Revenues                                   |  | $                            | 205,888    |   |                              | $ | 383,566    |  
|                                           |  |                              |            |   |                              |   |            |  
|Costs and Expenses                         |  |                              |            |   |                              |   |            |  
|Cost of sales                              |  |                              | 173,584    |   |                              |   | 200,103    |  
|General and administrative expenses        |  |                              | 596,345    |   |                              |   | 369,914    |  
|Marketing expenses                         |  |                              | 56,500     |   |                              |   | 42,141     |  
|Research and development expenses          |  |                              | 74,533     |   |                              |   | 75,163     |  
|Selling expenses                           |  |                              | 76,494     |   |                              |   | 32,429     |  
|                                           |  |                              |            |   |                              |   |            |  
|Total Costs and Expenses                   |  |                              | 977,456    |   |                              |   | 719,750    |  
|                                           |  |                              |            |   |                              |   |            |  
|Operating Loss                             |  |                              | (771,568   | ) |                              |   | (336,184   | )
|Other Expense                              |  |                              |            |   |                              |   |            |  
|Interest expense                           |  |                              | 125,845    |   |                              |   | 21,089     |  
|                                           |  |                              |            |   |                              |   |            |  
|Loss Before Income Taxes                   |  |                              | (897,413   | ) |                              |   | (357,273   | )
|Provision for Income Taxes                 |  |                              |           |   |                              |   |           |  
|                                           |  |                              |            |   |                              |   |            |  
|Net Loss                                   |  | $                            | (897,413   | ) |                              | $ | (357,273   | )
|                                           |  |                              |            |   |                              |   |            |  
|Basic and diluted loss per share           |  | $                            | (0.01      | ) |                              | $ | (0.01      | )
|                                           |  |                              |            |   |                              |   |            |  
|Weighted average common shares outstanding |  |                              | 98,056,563 |   |                              |   | 48,082,927 |  
|                                           |  |                              |            |   |                              |   |            |  

The accompanying notes are an integral part of these financial statements



4



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Satellite Security Corporation and Subsidiary

Unaudited Condensed Consolidated Statements of Cash Flows



|                                                                            |  |                           |          |   |                           |   |          |  
|--------------------------------------------------------------------------- |  | ------------------------- | -------- | - | ------------------------- | - | -------- | -
|                                                                            |  | 3 MonthsEndedMarch 312006 |          |   | 3 MonthsEndedMarch 312005 |  
|Cash Flows from Operating Activities                                        |  |                           |          |   |                           |   |          |  
|Net loss                                                                    |  | $                         | (897,413 | ) |                           | $ | (357,273 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                           |          |   |                           |   |          |  
|Depreciation                                                                |  |                           | 15,821   |   |                           |   | 11,199   |  
|Non-cash interest expense                                                   |  |                           | 98,609   |   |                           |   |         |  
|Changes in operating assets and liabilities:                                |  |                           |          |   |                           |   |          |  
|Accounts receivable, net                                                    |  |                           | (8,314   | ) |                           |   | 85,230   |  
|Inventories                                                                 |  |                           | (18,416  | ) |                           |   | 10,856   |  
|Accounts payable                                                            |  |                           | 53,068   |   |                           |   | (33,943  | )
|Accrued liabilities                                                         |  |                           | 4,224    |   |                           |   | 99,078   |  
|Deferred revenues                                                           |  |                           | 27,120   |   |                           |   | 150,797  |  
|Other                                                                       |  |                           | (2,202   | ) |                           |   | 7,105    |  
|                                                                            |  |                           |          |   |                           |   |          |  
|Net cash used in operating activities                                       |  | $                         | (727,503 | ) |                           | $ | (26,951  | )
|                                                                            |  |                           |          |   |                           |   |          |  
|Cash Flows from Investing Activities                                        |  |                           |          |   |                           |   |          |  
|Purchases of property and equipment                                         |  |                           | (66,603  | ) |                           |   | 5,897    |  
|Deposit on Inventory                                                        |  |                           | (48,000  | ) |                           |   |         |  
|                                                                            |  |                           |          |   |                           |   |          |  
|Net cash (used in) provided by investing activities                         |  |                           | (114,603 | ) |                           |   | 5,897    |  
|                                                                            |  |                           |          |   |                           |   |          |  
|Cash Flows from Financing Activities                                        |  |                           |          |   |                           |   |          |  
|Repayment of long-term debt                                                 |  |                           | (17,344  | ) |                           |   | (4,378   | )
|Proceeds from short-term loan                                               |  |                           | 926,220  |   |                           |   | 40,150   |  
|Shareholder advances from related party                                     |  |                           |         |   |                           |   | 12,000   |  
|Shareholder repayments from related parties                                 |  |                           | (85,000  | ) |                           |   | (19,409  | )
|                                                                            |  |                           |          |   |                           |   |          |  
|Net cash provided by financing activities                                   |  |                           | 823,876  |   |                           |   | 28,363   |  
|                                                                            |  |                           |          |   |                           |   |          |  
|Net (Decrease) Increase in Cash                                             |  |                           | (18,230  | ) |                           |   | 7,309    |  
|Cash - Beginning of Period                                                  |  |                           | 16,442   |   |                           |   | 2,239    |  
|                                                                            |  |                           |          |   |                           |   |          |  
|Cash - End of Period                                                        |  | $                         | (1,788   | ) |                           | $ | 9,548    |  
|                                                                            |  |                           |          |   |                           |   |          |  
|Cash paid during the period for interest                                    |  | $                         | 19,895   |   |                           | $ | 21,089   |  
|                                                                            |  |                           |          |   |                           |   |          |  

The accompanying notes are an integral part of these financial statements



5



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SATELLITE SECURITY CORPORATION

NOTES TO FINANCIAL STATEMENTS

Note 1: Organization and Basis of Presentation

The Company

Celtron International, Inc. (referred to in this report as Celtron,) was incorporated under the laws of the State of Nevada on April 8, 1998. In May 2006, the stockholders of Celtron approved a change of name from
Celtron International, Inc. to Satellite Security Corporation (referred to in this report as we or the Company) which became effective on May 23, 2006 after the filing of Amended and Restated Articles
of Incorporation with the Secretary of State of Nevada. The Company is authorized to issue a total of Two Hundred Fifty Million (250,000,000) shares of common stock with a par value of $0.001. In addition the Company is authorized to issue Ten
Million (10,000,000) shares of preferred stock with a par value of $0.001. The Company is primarily engaged in the development and sale of communications systems that integrate computer intelligence, the Global Positioning System
(GPS) and ReFLEX paging technology for asset tracking and monitoring.

History

Celtron and Satellite Security Systems, Inc., a California corporation (Satellite) entered into an Agreement and Plan of Merger dated
December 9, 2005 (the Merger Agreement). On December 31, 2005, Satellite merged with and into a wholly owned subsidiary of the Company (the Merger). Pursuant to the terms of the Merger Agreement, the Company issued
one share of its common stock in exchange for each 3.12 shares of Satellite outstanding resulting in the issuance of 65,076,750 shares of common stock to the former stockholders of Satellite. Holders of the 32,979,813 outstanding shares of Company
common stock continued to hold their stock following the Merger and there were no monetary assets exchanged to these holders.

Basis of Presentation

In accordance with generally accepted accounting principles, the Merger was treated as a purchase for
financial reporting purposes. In accordance with the provisions of Statement of Financial Accounting Standards No. 141, Business Combinations, Satellite was considered the acquiring enterprise for financial reporting purposes. The
Merger was accounted for as a reverse acquisition with Satellite as the accounting acquirer and the Company as the surviving company for legal purposes. Accordingly the financial statements include the historical results of operations of Satellite,
the accounting acquirer, except for the statements of changes in shareholders deficiency, which has been converted to shares of the Company based on the above merger ratios.

The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiary Satellite have been prepared in accordance with
the rules and regulations of the Securities and Exchange Commission for Form 10-QSB. Accordingly, certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting
principles, have been condensed or omitted pursuant to such rules and regulations.



6



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In the opinion of management, these financial statements reflect all normal recurring adjustments
necessary for a fair presentation, and in order to make the financial statements not misleading. These financial statements should be read in conjunction with the audited consolidated financial statements included in the Companys Annual Report
on Form 10-KSB for the year ended December 31, 2005. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the accompanying financial statements, the Company has incurred significant losses from operations in 2004 and 2005. This factor among others, including continuing negative cash flows from
operations, negative working capital and shareholder deficiencies indicate that the Company may be unable to continue as a going concern for a reasonable period of time. The financial statements do not include any adjustments relating to the
recoverability of assets, the amounts of liabilities, and their classifications that might be necessary should the Company be unable to continue as a going concern. The Companys continuation as a going concern is dependent on its ability to
generate sufficient cash flow to meet its obligations on a timely basis and ultimately to attain profitability.

Management has recently
funded its operations through borrowings under a credit facility from a related party (see Note 6). The Company is currently seeking additional sources of funding to meet working capital requirements until the Company achieves profitability.

Note 2: Summary of Significant Accounting Policies

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America. Following is a description of the most significant of those policies:

Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition: The Company recognizes revenues for (1) monitoring services, when the services are rendered; and (2) product, at
the time of sale. The Company does not recognize revenue until (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the sellers price to the buyer is fixed or
determinable; and (4) collection is reasonably assured. Monthly billings for services are presented in advance of rendering the related services. Deferred revenue consists of these billings in advance and are recognized in the month that the
services are rendered.

Basic and Diluted Net Loss Per Share: The Company computes net loss per share in accordance with SFAS
No. 128, Earnings per Share (SFAS 128). SFAS 128 requires



7



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presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss available to
common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period, if any, including stock options,
using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise
of stock options or warrants. There are no potentially dilutive shares, therefore diluted net loss per share has not been calculated.

Stock-Based Compensation:In December 2004, the Financial Accounting Standards Board (FASB) revised SFAS No. 123, Share-Based Payment (SFAS No. 123R), which establishes accounting for share-based awards
exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period. On April 14, 2005, the U.S. Securities and Exchange Commissions adopted a new rule amending
the effective dates for SFAS 123R. In accordance with the new rule, the accounting provisions of SFAS No. 123R are effective for the Company beginning in the quarter ended March 31, 2006. Under SFAS No. 123R, stock-based compensation
cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense over the employees requisite service period. The Company adopted the provisions of SFAS No. 123R effective January 1,
2006, using the modified prospective application, which provides for certain changes to the method for valuing stock-based compensation. Under the modified prospective application, the cost of new awards and awards modified, repurchased or cancelled
after the required effective date and the portion of awards for which the requisite service has not been rendered (unvested awards) that are outstanding as of the required effective date will be recognized as the requisite service is rendered on or
after the required effective date. The compensation cost for that portion of awards shall be based on the grant-date fair value of those awards as calculated for either recognition or pro forma disclosures under SFAS No. 123 On
November 10, 2005, the FASB issued FASB Staff Position No. SFAS 123(R)-3, Transition Election Related to Accounting for Tax Effects of Share-Based Payment Awards. The Company has elected to adopt the alternative transition method
provided in this FASB Staff Position for calculating the tax effects of share-based compensation pursuant to SFAS No. 123R. The alternative method includes a simplified method to establish the beginning balance of the additional paid-in capital
pool (APIC pool) related to the tax effects of employee share-based compensation, which is available to absorb tax deficiencies recognized subsequent to the adoption of SFAS No. 123R.

On November 4, 2005, the Company granted its CEO a non-qualified stock option to purchase up to 1,923,077 shares of its common stock at a price per
share of $0.31. The options expire on November 3, 2015 and vest over three years based on meeting a 2006 revenue and earnings performance target. The Company will not reach its 2006 performance target and based on the current fair market value
of the Companys common stock, under the Black-Scholes option pricing model, no compensation expense was recognized in connection with this option grant.

Option valuation models require the input of highly subjective assumptions, including the expected life and stock price volatility. Because of these changes in the subjective input



8



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assumptions can materially affect the fair value estimate, in the opinion of management, the existing models do not necessarily provide a reliable single
measure of the fair value of its options. The adoption of SFAS No. 123(R)s fair value method may have a negative impact on the Companys results of operations if the Company grants share-based payments to its employees in the future,
although it does not expect it will have any impact on its overall financial position. The impact of adopting SFAS No. 123R cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. SFAS
No. 123R also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current accounting literature. The requirement will
reduce net operating cash flows and increase net financing cash flows in periods of adoption.

Issuance of Stock for Non-cash
Consideration: All issuances of the Companys common stock for non-cash consideration have been assigned a dollar amount equaling either the market value of the shares issued or the value of consideration received whichever is more readily
determinable. The majority of the non-cash consideration received pertains to services rendered by consultants and others and has been valued at the market value of the shares issued. In certain issuances, the Company may discount the value assigned
to the stock issued for illiquidity and restrictions on resale.

The Companys accounting policy for equity instruments issued
to consultants and vendors in exchange for goods and services follows the provisions of EITF Issue No. 96-18, Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Servicesand EITF Issue No. 00-18, Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other Than Employees.The measurement date for the fair value of the equity instruments issued is determined at the
earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendors performance is complete. In the case of equity instruments issued to
consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

Note 3: Property, Equipment and Other
Assets

Property and equipment as of March 31, 2006 consists of the following:



|                               |  |   |          |  
|------------------------------ |  | - | -------- | -
|Furniture and equipment        |  | $ | 259,192  |  
|Purchased software costs       |  | $ | 143,724  |  
|                               |  |   |          |  
|Total property and equipment   |  |   | 402,916  |  
|Less: Accumulated depreciation |  |   | (194,622 | )
|                               |  |   |          |  
|Net property and equipment     |  | $ | 208,294  |  
|                               |  |   |          |  

Depreciation expense was $15,821 and $11,199 for the three months ended March 31, 2006 and
2005, respectively.



9



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Note 4: Long-Term Debt

As of March 31, 2006, long-term debt consists of the following obligations:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |           |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | --------- | -
|Note payableshareholder, Company pledged inventory, accounts receivable, equipment, and intangible assets, interest at the banks
prime rate plus 2% (9.25% as of December 31, 2005), payable in monthly principal installments of $2,000 plus interest with a final payment due May 2007. The Company is the guarantor of the underlying note with the bank in the same amount, under
the same terms, and is currently making payments to the bank on behalf of the shareholder on this note |  | $ | 221,206   |  
|Note payableshareholder and director, unsecured, face amount of the note is $1,600,000 present value of amount outstanding calculated
based on a discount factor of 7% over the 228 month term, payable in minimum monthly principal and interest installments of $7,000; in addition, 15% net cash proceeds of the sale of capital stock sold in specified financing
transactions                                                                                                            |  |   | 870,084   |  
|Note payablesoftware purchase, secured by related software and guaranteed by shareholder due in 48 monthly installments of $1,885
bearing interest at 9% due December 2007                                                                                                                                                                                                                                                                                                                    |  |   | 39,689    |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |           |  
|Total long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |   | 1,130,979 |  
|Less current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |   | (68,063   | )
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |           |  
|Long-term debt - non-current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | $ | 1,062,916 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |   |           |  

Note 5: Shareholder Transactions

As disclosed in Note 6 below, during the three month period ended March 31, 2006, the Company entered into a credit arrangement including the
issuance of a convertible promissory note. Management has determined that the convertible promissory note had a beneficial conversion feature of $748,864 as of March 31, 2006. In accordance with generally accepted accounting principles, the
difference between the conversion price and the Companys stock price on the date of issuance of each advance under the Note is considered to be interest expense amortized over the life of the Note with a like amount recorded as an adjustment
to paid in



10



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capital. Accordingly, the beneficial conversion feature was amortized through the maturity date of December 31, 2006. The amount amortized for the three
months ended March 31, 2006 was $98,609 which has been recorded as an interest expense. The unamortized amount of $650,255 was offset against the convertible promissory note and an increase to paid in capital of $748,864 was recorded.

Note 6: Related Party Transactions

Notes and Loans: As of March 31, 2006, the Company had notes and loans to related parties consisting of the following:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   |          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ---------
|Note payable  officer - unsecured, 12% interest, due March 1, 2006                                                                                                                                                                                                                                                                                                                                                                                                   |  | $ | 85,000   
|Loans payable  shareholders  unsecured, non-interest bearing, no terms for repayment                                                                                                                                                                                                                                                                                                                                                                                |  |   | 157,648  
|Note payable- shareholder, The Aston Organization, Ltd. convertible promissory note, 8.5% interest, due December 31, 2006. As of
March 31, 2006, principal and accrued and unpaid interest amounted to $847,492, offset by an unamortized beneficial conversion feature totaling $650,255                                                                                                                                                                             |  |   | 197,237  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   |          
|Total short-term related party debt                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |   | 439,885  
|Note payable-shareholder, Company pledged inventory, accounts receivable, equipment, and intangible assets, interest at the banks prime
rate plus 2% (9.75% as of March 31, 2006), payable in monthly principal installments of $2,000 plus interest with a final payment due May 2007. The company is the guarantor on the underlying note with the bank in the same amount, and is
currently making payments to the bank on behalf of the shareholder on this note |  |   | 221,206  
|Loan payable-shareholder-unsecured due in 228 installments of $7,000, imputed interest of 7%                                                                                                                                                                                                                                                                                                                                                                          |  |   | 870,083  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   |          
|Total related party debt                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | $ | 1,531,174
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   |          

Since March 31, 2006 through the date of this report, the Company has repaid $65,000 of notes
payable to officers originally due for repayment on March 1, 2006. Repayment of the outstanding note is dependant on the Company raising additional capital during 2006.

On February 14, 2006, the Company entered into a credit arrangement with The Aston Organization, Ltd. (Aston) and Zirk Engelbrecht
(Engelbrecht), a member of the Board of



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Directors, and recently approved to assume the role of the Chairman of the Board of the Company. Zirk Engelbrecht and Stephen Hallock, also a member of the
Board of Directors, are the sole shareholders of Aston. Pursuant to the terms and conditions set forth in a convertible promissory note (the Note) between the Aston and the Company, Aston has agreed to make loans to the Company in an
aggregate amount up to $2,000,000. The outstanding balance on the Note bears interest at the rate of 8.5% per annum. The Note provides Aston the right to convert the aggregate amount of principal and interest of the Note at any time into shares
of the Companys common stock at a conversion rate of $0.20 per share. The maturity date of the Note is December 31, 2006. The amount outstanding under the Note at March 31, 2006 was $847,492 offset by an unamortized beneficial
conversion feature balance of $650,255. This credit arrangement has been discontinued at this time by Aston and Engelbrecht. The continuance of funding under this credit arrangement is unknown at this time.

In accordance with generally accepted accounting principles, the difference between the conversion price and the Companys stock price on the date
of issuance of each advance under the Note is considered to be interest expense amortized over the life of the Note with a like amount recorded as an adjustment to paid in capital. Accordingly, the beneficial conversion feature was amortized through
the maturity date of December 31, 2006. The amount amortized for the three months ended March 31, 2006 was $98,609. The unamortized amount of $650,255 was offset against the convertible promissory note and an increase to paid in capital of
$748,864 was recorded.

Interest: The Company paid $10,207 and $2,752 in interest to a shareholder for the three months ended
March 31, 2006 and 2005, respectively

Legal Fees: The Company paid approximately $35,000 and $2,500 in legal fees to a law
firm in which a relative of an officer, shareholder and director of the Company is a shareholder for the three months ended March 31, 2006 and 2005, respectively.

Note 7: Commitments and Contingencies

In the course of business, the Company has been, and may
continue to be, involved in various claims seeking monetary damages and other relief. The amount of the ultimate liability, if any, from such claims cannot be determined. However, in the opinion of the Companys management, the ultimate
liability for any legal claims currently pending against the Company will not have a material adverse affect on the Companys financial position, results of operations or cash flows. Insofar as current legal claims against the Company have been
filed or are currently ongoing, see Part II, Item 1 below.

Note 8: Recent Accounting Pronouncements

In December 2004, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB
Statement No. 3, SFAS No. 154 requires retrospective application to prior periods financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative
effect of the change. SFAS No. 154 also requires that retrospective application of a



12



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change in accounting principle be limited to the direct effects of the change. Indirect effects of a change in accounting principle, such as a change in
nondiscretionary profit-sharing payments resulting from an accounting change, should be recognized in the period of the accounting change. SFAS No. 154 also requires that a change in depreciation, amortization or depletion method for
long-lived, non-financial assets be accounted for as a change in accounting estimate effected by a change in accounting principle. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after
December 15, 2005. Early adoption is permitted for accounting changes and corrections of errors made in fiscal years beginning after the date this Statement is issued. Management does not expect the implementation of this new standard to have a
material impact on the Companys financial position, results of operations and cash flows.

Note 9: Subsequent Events

Since March 31, 2006 through the date of this report, the Company has repaid $65,000 of notes payable to officers originally due for repayment on
March 1, 2006. Repayment of the outstanding note is dependant on the Company raising additional capital during 2006.

Since
March 31, 2006 through the date of this report, the Company has borrowed an additional $310,000 from Aston under the terms of the Note, bringing the aggregate amount outstanding under the Note to $1,130,533. As of this time, Aston has not fully
met its obligations under this Note. It is uncertain as to when Aston will, if ever, continue this funding arrangement.

On
May 19, 2006 the Company entered into a $540,000 Promissory Note with an unrelated third party investor. The loan resulted in net proceeds to the Company of $447,500. The amounts outstanding under the Promissory Note bear interest at 8% and all
principal and accrued interest under the Promissory Note are due and payable on August 31, 2006. The Promissory Note is secured by a lien on substantially all of the Companys assets, including a pledge of the Companys shares in
Satellite. In connection with the issuance of the Promissory Note, the Company issued to the investor warrants to purchase an aggregate of 540,000 shares of common stock at an exercise price of $.25 per share. The warrants are exercisable on or
before May 19, 2009.

On May 19, 2006, the Company entered into an employment agreement with Mr. John L. Phillips (the
Employment Agreement) pursuant to which he will receive (i) an annual base salary of $225,000; (ii) an annual bonus opportunity in the amount of $35,000 payable in cash for each subsidiary or operating division of the Company
that meets its operating budget for each year during the term of the Employment Agreement; (iii) an additional annual bonus opportunity in an amount to be determined by the Board of Directors; and (iv) an automobile allowance of $1,500 per
month. Mr. Phillips will also be eligible to participate in our employee benefit programs. Under the Employment Agreement, we also agreed (i) to grant to Mr. Phillips, effective May 16, 2006, an option to purchase 4,000,000
shares of our common stock at an exercise price equal to the per-share closing price of our common stock on the date of grant, (ii) to reprice 1,923,076 options previously granted to Mr. Phillips from an exercise price of $.312 per share
to an exercise price of $.15 per share, and (iii) to remove the restrictions and fully vest 1,923,076 shares of restricted common stock previously issued to Mr. Phillips.



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|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
|------- | ---------------------------------------------------------

FORWARD LOOKING STATEMENTS

In addition to historical information, this discussion of our results of operation and
financial condition contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. As contained herein, the words
expects, anticipates, believes, intends, will, and similar types of expressions identify forward-looking statements, which are based on information that is currently available to the
Company, speak only as of the date hereof, and are subject to certain risks and uncertainties. Please be advised that our actual financial condition, operating results and business performance may differ materially from that projected or estimated
by us in forward-looking statements. We have attempted to identify, in context, certain factors that we currently believe may cause actual future experiences and results to differ from our current expectations which are set forth below under the
heading Risk Factors. The difference may be caused by a variety of factors, including, but not limited to, the need for additional capital to execute the Companys business plan, the failure to develop significant demand for our
products and services, competition, including entry of new competitors, unexpected costs, lower revenues and net income than forecast, price increases for supplies, inability to raise prices, the risk of litigation and administrative proceedings
involving us and our employees, higher than anticipated labor costs, the possible fluctuation and volatility of our operating results and financial condition, adverse publicity and news coverage, inability to carry out marketing and sales plans,
loss of key executives, changes in interest rates, inflationary factors, and other specific risks that may be alluded to in this report.

OVERVIEW

We entered into a Merger Agreement with Satellite Security Systems, Inc. on December 9, 2005 pursuant to which Satellite was
merged with and into a wholly owned subsidiary of the Company effective December 31, 2005, as discussed in further detail in Note 1 to the Consolidated Financial Statements. In accordance with generally accepted accounting principles, the
Merger was accounted for as a reverse acquisition. Accordingly the financial statements included in this report contain the historical results of operations of Satellite, except for the statements of changes in shareholders deficiency, which
has been converted to shares of the Company based on the above merger ratios.

Since the Merger, we have primarily engaged in the
development and sale of communications systems that integrate computer intelligence, GPS and wireless communications technology for asset tracking and monitoring. Our products have the potential for broad-scale applications for law enforcement,
homeland security, fleet tracking and management, utility applications and fixed point monitoring. We have initially focused our solutions on services for law enforcement, and we have several programs currently under way with Federal, state and
local law enforcement agencies. These programs allow law enforcement officials to utilize our solutions to track suspects or convicted felons (e.g., sexual predators) covertly. We also offer a



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Bait Car solution for law enforcement to deploy in aiding the fight against auto theft, a car with an integrated tracking device can be left
unattended and we can notify law enforcement in the event the vehicle moves. We are beginning applications for school transportation and student safety, including monitoring the location of school buses in transit.

We generate one-time revenues through direct and OEM sales of our GPS tracking devices which we market under the name GlobalGuard. We then offer
and supply stealth and covert monitoring systems with two-way communications capabilities linked to a Monitoring and Support Center (the MSC) with trained staff on duty 24 hours a day, seven days a week. The monitoring services are
provided under the terms of service contracts which provide monthly recurring revenue to the Company. Typically these contracts have an initial period of one to five years. The amount of revenues derived from monitoring services is based on customer
options for monitoring and control functions, such as monitoring movement of vehicles in a fleet, remotely initiating operation of a generator, valve or other piece of equipment.

RESULTS OF OPERATIONS

Revenues

Revenues were $205,888 and $383,566 for the three months ended March 31, 2006 and 2005, respectively. Revenues decreased during the period by $177,678 or 46% primarily due to decreased revenue from the MSC and
lower hardware revenues due to working capital constraints that limited the Companys ability to purchase inventory.

During the
period ended March 31, 2006, we entered into an OEM Agreement which we expect will generate significant hardware revenues in 2006. Our limited working capital and absence of inventory prevented us from shipping initial orders to this customer
during the first quarter. We expect to begin deliveries and recognizing revenue from this OEM client in the second and third quarters of 2006.

Cost of
Sales

Cost of sales includes hardware, wireless airtime expense and staffing for the MSC. Costs of sales were $173,584 and $200,103 for
the three months ended March 31, 2006 and 2005, respectively. Stated as a percentage of revenues, cost of sales for the corresponding periods were 84.3% and 52.1% respectively. The increase in cost of sales as a percentage of revenues was due
to higher hardware costs from third party manufacturers, and reduced leverage on fixed costs at the MSC.

General and Administrative

General and administrative expenses include payroll and costs associated with the finance, facilities, and legal and other administrative functions of the
Company. General and administrative costs were $596,345 and $396,914 for the three months ended March 31, 2006 and 2005, respectively. The increase in General and Administrative expenses was primarily due



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to increased audit and legal fees, partly as a result of our becoming a public company, as well as infrastructure and headcount growth in the administrative
and finance functions.

We believe that our general and administrative expenses are adequate to support current needs and some growth. We
anticipate that general and administrative expenses would need to increase with a significant increase in revenues but would increase at a slower rate than revenues.

Marketing Expenses

Marketing expenses include payroll, and costs associated with advertising,
promotions, trade shows, seminars, and similar programs. Marketing expenses were $56,500 and $42,141 for the three months ended March 31, 2006 and 2005, respectively.

Marketing expenses are expected to rise slightly for the balance of 2006 in connection with our marketing support to distribution channels.

Research and Development

Research and development
expenses include payroll, and costs associated with software development, product design and outsourcing. Research and development expenses were $74,533 and $75,163 for the three months ended March 31, 2006 and 2005, respectively.

Research and development expenses are expected to grow slightly for the balance of 2006 due to the Companys ongoing efforts of integrating
customer applications and introducing new hardware devices for sale.

Selling Expenses

Selling expenses include primarily payroll, and travel expenses. Selling expenses were $76,494 and $32,429 for the three months ended March 31, 2006
and 2005, respectively. The increase in selling expenses was primarily due to an investment in headcount to support our sales channel approach.

The Company intends to continue its channel sales approach and does not anticipate a significant increase in selling expenses in the near term.

Interest Expense

Interest expense was $125,845 and $21,089 for the three months ended 31 March, 2006 and 2005,
respectively. The increase in interest expense was primarily due to borrowings under a Convertible Promissory Note issued to the Aston Organization, Ltd. and the amortization of a beneficial conversion feature associated with that note which
amounted to $98,609 for the period ended March 31, 2006.



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Net Loss

Net loss includes loss from operations and interest expense. Net losses were $897,413 and $357,273 for the three months ended March 31, 2006 and 2005, respectively. The increase in the current year loss was due primarily to a reduction
in revenue of $177,678, an increase in operating costs of $257,706 and increased interest expense of $104,756.

Liquidity and Capital Resources

On March 31, 2006, we had a cash deficit of $1,788 and accounts receivable, net, of $109,850. Our working capital deficit as of
March 31, 2006 was $ 1,440,792, compared to a deficit of $1,248,299 at December 31, 2005.

Net cash used in operating activities
during the three month period ended March 31, 2006 was $727,503. The primary use of cash from operating activities was the net loss of $897,413, an increase of $8,314 in accounts receivable and an increase of $18,416 in inventory. The primary
sources of cash from operating activities were an increase in accounts payable of $53,068 and deferred revenues of $27,120.

Net cash used
by investing activities during the three month period ended March 31, 2006 was $114,603 and was primarily from additions to property and equipment and a deposit on inventory. There are no significant capital expenditures planned by the Company
within the foreseeable future.

Since our inception, we have financed our cash needs primarily through financing activities with related
parties. Net cash from financing activities in 2005 was $1,435,856, primarily from the proceeds on the sale of common stock and issuance of debt to related parties. In the three month period ended March 31, 2006, we paid down $17,344 in long
term debt and borrowed an additional $841,220 from related parties.

We funded a significant portion of our operations in the three month
period ended March 31, 2006 from borrowings under a Convertible Promissory Note (the Note) dated February 16, 2006 from The Aston Organization Ltd. The Aston Organization Ltd. is a significant shareholder of the Company and is
controlled by Zirk Engelbrecht, Chairman of the Board and a director of the Company. Under the terms of the Note, the Company has the right to request advances up to an aggregate of $2,000,000. Our borrowings under this Note totaled $847,492 and
$1,130,533 at March 31, 2006 and the date of the Original Filing of this report, respectively. As of this time, borrowings under this $2,000,000 Note are not available to the Company. It is uncertain when and if future amounts will be made
available to fund the Companys operations

On May 19, 2006 we entered into a $540,000 Promissory Note with an unrelated third
party investor that resulted in net proceeds to us of $447,500 The amounts outstanding under the Promissory Note bear interest at 8% and all principal and accrued interest under the Promissory Note are due and payable on August 31, 2006. The
Promissory Note is secured by a lien on substantially all of our assets, including a pledge of our shares in Satellite. In connection with the issuance of the Promissory Note, we issued to the investor warrants to purchase an aggregate



17



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of 540,000 shares of common stock at an exercise price of $.25 per share. The warrants are exercisable on or before May 19, 2009.

We will need to raise additional capital over the course of 2006. We plan to raise this additional capital from the sale of debt or equity securities.
There are no commitments or arrangements for other offerings in place. There is no assurance that we will be able to raise additional funds, and if we are unsuccessful, we will be forced to curtail operations or possibly be forced to evaluate a sale
or liquidation of the Companys assets. Even if we are successful in raising additional funds, there is no assurance regarding the terms of any additional investment. Any future financing may involve substantial dilution to existing
shareholders.

As emphasized in the Report of Independent Registered Public Accounting Firm on our December 31, 2005 financial
statements, we have incurred recurring negative cash flows from operations, significant losses, working capital deficits and increasing shareholder deficiencies. Further, we have yet to establish profitable operations. These factors, among others,
raise substantial doubt about our ability to continue as a going concern.

RISK FACTORS

This Quarterly Report on Form 10-QSB contains statements that are forward-looking. These statements are based on current expectations and assumptions
that are subject to risks and uncertainties. Actual results could differ materially because of issues and uncertainties such as those listed below and elsewhere in this report, which, among others, should be considered in evaluating the
Companys financial outlook.

To satisfy our capital requirements, we will seek to raise funds in the public or private capital markets,
which may not be given on terms favorable to us, or we may not be able to raise funds at all. In the event that we receive funds on undesirable terms, or are unable to raise additional funds, we may not be able to fund our operations and will not be
able to continue as a going concern. The additional funding may have terms which will dilute the value of your investment.

Our
ability to raise additional funds in the public or private markets will be adversely affected if the results of our business operations are not favorable. We may seek additional funding through the sale of debt or equity securities. We cannot assure
you that any such funding will be available to us, or if available, that it will be available on terms favorable to us. If adequate funds are not available, we may not be able to continue our operations or implement our planned additional research
and development activities. As a result, we may be required to discontinue our operations or curtail our planned sales and research and development plans, thereby reducing or eliminating the value of our equity. If we are successful in obtaining
additional funds, the terms of the financing may have the effect of diluting your interest.

We have a history of losses, and are unsure if we will
become profitable in the future.

We have incurred losses since our inception and cannot assure you that our future operations will
be implemented successfully or that it will ever have profitable operations. We



18



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have yet to establish significant customer demand for our solutions and may not for a significant period of time, if ever. If we are unable to establish
demand for our solutions, we may be forced to cease operations entirely. Furthermore, we are experiencing the costs and uncertainties of an emerging business, including additional expenditures, unforeseen costs and difficulties, complications, and
delays, all of which must be resolved and/or paid without the benefit of a predictable revenue stream. Management can not be sure that we will be successful in meeting these challenges and addressing these risks and uncertainties. If we are unable
to do so, our business will not be successful.

As of March 31, 2006, a limited number of stockholders own approximately 53% of the
Companys stock and may act, or prevent certain types of corporate actions, to the detriment of other stockholders.

The
Companys directors, officers and greater than 5% stockholders own, as of March 31, 2006, approximately 51 million shares the Companys common stock, constituting approximately 53% of our issued and outstanding common stock.
Accordingly, these stockholders may, if they act together, exercise control over all matters requiring stockholder approval, including the election of a majority of the directors and the determination of significant corporate actions. This
concentration could also have the effect of delaying or preventing a change in control that could otherwise be beneficial to our stockholders.

We
depend on a limited number of third parties to manufacture and supply certain components of our solutions.

We rely on a limited
number of sole suppliers for certain components of our solutions. We do not have long-term agreements with these suppliers. If these parties do not perform their obligations, or if they cease to supply the components needed for our solutions, we may
be unable to find other suppliers and our business would be seriously harmed. We cannot be sure that alternative sources for these components will be available when needed, or if available, that these components will be available on commercially
reasonable terms. These sole suppliers include Smart Synch, Skytel, and USA Mobility all of which supply ReFLEX modem boards and/or ReFLEX network data for use in our remote sensor integration and monitoring services.

Although we believe that we have access to sufficient quantities of such components as well as access to the respective networks, we have to be aware
that if our agreements with these or other suppliers and manufacturers are terminated or expire, if we are unable to obtain sufficient quantities of these products or components critical for its solutions, if the quality of these products or
components is inadequate, or if the terms for supply of these products or components become commercially unreasonable, our search for additional or alternate suppliers and manufacturers could result in significant delays, added expense and our
inability to maintain or expand our customer base. Any of these events could require us to take unforeseen actions or devote additional resources to provide our products and services and could harm our ability to compete effectively.

If wireless communications providers on which we depend for services decide to adopt new wireless technologies, or abandon or do not continue to expand their
wireless networks, our operations may be disrupted, we may lose customers and our revenues could decrease.



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Currently, our solutions function on ReFLEX, GPRS and Inmarsat networks. These protocols have various
coverage footprints and are intermixed in order to provide the best service based on each particular subscribers needs. The coverage for ReFLEX is primarily North America, GPRS is the United States, Europe and Canada, while Inmarsat has world
wide coverage. If wireless communications providers abandon the protocols upon which our solutions now function in favor of other types of wireless technology, we may not be able to provide services to customers, or it may be forced to incur
considerable costs in order to adapt its solutions to new protocols. In addition, if cellular carriers do not expand their coverage areas, we will be unable to meet the needs of customers who may wish to use the Companys services outside the
current cellular coverage area.

If one or more of the agreements we have with wireless communications providers is terminated and as a result, we
are unable to offer solutions to customers within a wireless communications providers coverage area, we may be unable to deliver our solutions, may lose customers, and our revenues could decrease.

Our existing agreements with wireless communications providers may, in some cases be terminated immediately upon the occurrence of certain conditions or
with prior written notice. If one or more of our wireless communications providers decides to terminate or not to renew its contract with us, we may incur additional costs relating to obtaining alternate coverage from another wireless communications
provider outside of our primary coverage area, or we may be unable to replace coverage at all, causing a complete loss of services to customers in that coverage area.

Our success depends upon our ability to develop new solutions and enhance our existing solutions. If we cannot deliver the features and functionality that customers demand, we will be unable to retain or attract
new customers.

If we are unable to develop new solutions, are unable to enhance and improve our solutions successfully in a timely
manner, or fail to position and/or price our solutions to meet market demand, we may not attract new customers, existing customers may not expand their use of our solutions, and its business and operating results will be adversely affected. If
enhancements to existing solutions do not deliver the functionality that our customer base demands, its customers may choose not to renew their agreements when they reach the end of their initial contract periods, and our business and operating
results will be adversely affected. If we cannot effectively deploy, maintain and enhance our solutions, our revenues may decrease, we may not be able to recover costs, and our competitive position may be harmed.

We depend on GPS technology owned and controlled by others. If we do not have continued access to GPS technology or satellites, we will be unable to deliver a
majority of our solutions and revenues will decrease.

A majority of our solutions rely on signals from GPS satellites built and
maintained by the United States Department of Defense. GPS satellites and their ground support systems are subject to electronic and mechanical failures and sabotage. If one or more satellites malfunction, there could be a substantial delay before
they are repaired or replaced, if at all, our products and services may cease to function, and customer satisfaction would suffer.



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In addition, the United States government could decide to discontinue operation and maintenance of GPS
satellites or to charge for the use of GPS. Furthermore, because of ever-increasing commercial applications of GPS and international political unrest, United States government agencies may become increasingly involved in the administration or the
regulation of the use of GPS signals in the future. If factors such as the foregoing affect GPS, for example by affecting the availability, quality, accuracy or pricing of GPS technology, our business will suffer.

A disruption of our services or of our software applications due to accidental or intentional security breaches may harm our reputation, cause a loss of revenues
and increase corporate expenses.

Unauthorized access, computer viruses and other accidental or intentional actions could disrupt
information systems or communications networks or could adversely impact the functionality and security of our software products. We expect to incur significant costs to protect against the threat of security breaches and to alleviate problems
caused by any breaches. Currently, the wireless transmission of customers proprietary information is not protected by encryption technology. If a third party were to misappropriate our customers proprietary information or adversely
impact the operations of our customers, we could be subject to claims, litigation or other potential liabilities that could seriously harm our revenues and result in the loss of customers.

System or network failures could reduce corporate sales, increase costs or result in liability claims.

Any disruption to our services, information systems or communications networks or those of third parties could result in the inability of our customers to
receive our services for an indeterminate period of time. Our hosted solutions and related operations depend upon our ability to maintain and protect our computer systems at data centers located in San Diego, California, and our network operations
center in San Diego, California. Our services may not function properly and we may not be able to adequately support and maintain our software products if our systems fail, if there is an interruption in the supply of power, or if there is an
earthquake, fire, flood or other natural disaster, or an act of war or terrorism. Within each of our data centers, we have fully redundant systems; however, in the event of a system or network failure, the process of shifting access to customer data
from one data center to the other would be performed manually, and could result in a further disruption of our services and our ability to adequately support and maintain software products. Any disruption to our services could cause the loss of
customers or revenue, or face litigation, customer service or repair work that would involve substantial costs and could distract management from operating the core business.

Our success depends on our ability to maintain and expand our direct and indirect its sales channels.

To increase our market awareness, customer base and revenues, management needs to expand direct and indirect sales operations. There is strong competition for qualified sales personnel, and we may not be able to attract or retain sufficient
new sales personnel to expand its operations. New sales personnel require training, and it takes time for them to achieve full productivity, if at all. In addition, we believe that our success is dependent on the expansion of indirect distribution
channels, including relationships with wireless carriers, independent sales



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agents and resellers. These sales channel alliances require training in selling solutions, and it will take time for these alliances to achieve productivity,
if at all. We may not be able to establish relationships with additional distributors on a timely basis, or at all.

Defects or errors in our
solutions could result in the cancellation of or delays in the implementation of our solutions, which would damage our reputation and harm our financial condition.

We must develop solutions quickly to keep pace with the rapidly changing remote sensor integration and monitoring market. Solutions that address this market are likely to contain undetected errors or defects,
especially when first introduced or when new versions are introduced. We may be forced to delay commercial releases of new solutions or updated versions of existing solutions until such errors or defects are corrected, and in some cases, we may need
to implement enhancements to correct errors that were not detected until after deployment of its solutions. Even after testing and release, our solutions may not be free from errors or defects, which could result in the cancellation or disruption of
services or dissatisfaction of customers. In some cases, customers may terminate their agreements with us, without penalty, if the solution provided does not meet the specifications agreed upon by the parties. Such contract terminations or customer
dissatisfaction would damage our reputation and result in lost revenues, diverted development resources, and increased support and warranty costs.

We face competition from internal development teams of potential customers and from existing and potential competitors, and if we fail to compete effectively, our ability to acquire new customers could decrease, our revenues could
decline and our business could suffer.

The market for remote sensor integration and monitoring is competitive and is expected to
become even more competitive in the future. If we do not compete effectively, competition could harm our business and limit our ability to acquire new customers and grow revenues, which in turn could result in a loss of market share and decline in
revenues. We believe that our solutions face competition from a number of business productivity solutions, including:



| |  |  | solutions developed internally by our prospective customers information technology staff, particularly by large customer prospects;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | discrete means of communication with mobile workers, such as pagers, two-way radios, handheld devices and cellular telephones;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | solutions designed to help companies schedule and route their mobile workers; and
| | - |  | ---------------------------------------------------------------------------------



| |  |  | solutions offered by smaller market entrants, many of which are privately held and operate on a regional basis.
| | - |  | ---------------------------------------------------------------------------------------------------------------

In addition, we believe that our solutions face competition from manufacturing companies that seek to enter the mobile resource management market, such as Trimble
Navigation and @Road.

We may also face potential competition from our current and potential alliances, such as wireless carriers, that may
develop their own solutions, develop solutions with captive and other suppliers or support the marketing of solutions of other competitors.



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We also face numerous challenges associated with overcoming the following competitive factors:



| |  |  | Size and resources. Many of our current and potential competitors have access to substantially greater financial, marketing, distribution, engineering and manufacturing resources
than we do, which may enable them to react more effectively to new market opportunities and customer requirements. Furthermore, these competitors may be able to adopt more aggressive pricing policies and offer more attractive terms than we can.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Name recognition. Many of our current and potential competitors have greater name recognition and market presence than we do, which may allow them to more effectively market and
sell solutions to our current and potential customers.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Limits of product and service offerings. Although we offer a broad range of mobile resource management solutions, a customer prospect may require functionality that we do not offer,
which may enable current and potential competitors to exploit the areas in which we do not develop solutions.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Customer relationships. Many of our current and potential competitors have pre-existing relationships with our large customer prospects, which may allow them to more effectively
market and sell competitive remote sensor integration and monitoring solutions.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As we seek to serve larger customers, we face
competition from businesses with greater financial resources and may be unable to compete effectively with these businesses.

The
existing market is competitive. Competition is particularly vigorous for larger customers, which is a customer segment we have worked to serve. We expect competition to increase further as companies develop new products and/or modify their existing
products to compete directly with our products. In addition, competitors may reduce prices to customers and seek to obtain customers through cost-cutting and other measures. To the extent these companies compete effectively with us, our business
could be adversely affected by extended sales cycles, fewer sales, and lower prices, revenue and margins.

Claims that we infringe third-party
proprietary rights could result in significant expenses or restrictions on our ability to provide our solutions.

Third parties may
claim that our current or future solutions infringe their proprietary rights or assert other claims against us. As the number of entrants into our market increases, the possibility of an intellectual property or other claim against us grows. Any
intellectual property or other claim, with or without merit, would be time-consuming and expensive to litigate or settle and could divert managements attention from our core business. As a result of such a dispute, we may have to pay damages,
incur substantial legal fees, develop costly non-infringing technology, if possible, or enter into license agreements, which may not be available on terms acceptable to us, if at all. Any of these results would increase our expenses and could
decrease the functionality of our solutions, which would make our solutions less attractive to current or potential customers. We have agreed in some of our agreements, and may agree in the future, to indemnify other parties for any expenses or
liabilities resulting from claimed infringements of the proprietary rights of third parties.



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If our customers do not have access to sufficient capacity on reliable wireless networks, we may be unable to
deliver services, our customers satisfaction could decline and revenues could decrease.

Part of the Companys ability to
grow and obtain profitability depends on the ability of wireless carriers to provide sufficient network capacity, reliability and security to customers. Even where wireless carriers provide coverage to entire metropolitan areas, there are occasional
lapses in coverage, for example due to tunnels blocking the transmission of data to and from wireless modems used with our solutions. These effects could make our services less reliable and less useful, and customer satisfaction could suffer.

Under the terms of our customer contracts for our hosted solutions, once the contract period expires, a customer may terminate our services with
little or no notice.

Our customer contracts for hosted solutions typically provide for a contract period of one to five years.
Under the terms of a typical contract, a customer will often be subject to a termination fee if it chooses to terminate the contract before the contract period expires. Once the contract period has expired, and unless a customer has executed a new
contract, the terms of the contract will remain in force on a month-to-month basis, allowing the customer to terminate the contract by giving very short notice and without incurring any termination fee. The termination of a significant number of
customer contracts or customer contracts providing a material portion of our revenues, could cause its business to suffer and adversely affect its financial results.

The production or reporting of inaccurate information could cause the loss of customers and expose us to legal liability.

The accurate production and reporting of information is critical to our customers businesses. If we fail to accurately produce and report information, we could lose customers, our reputation and ability to
attract new customers could be harmed, and we could be exposed to legal liability. We may not have insurance adequate to cover losses we may incur as a result of these inaccuracies.

We depend on recruiting and retaining qualified personnel, and our inability to do so may result in a loss in sales, impair our ability to effectively manage core operations or impair our ability to develop and
support corporate solutions.

Because of the technical nature of our solutions and the market in which we compete, our success
depends on the continued services of our current executive officers and our ability to attract and retain qualified personnel with expertise in wireless communications, GPS technologies, hosted software applications, transaction processing and the
Internet. Competitors and others have recruited our employees in the past and may attempt to do so in the future. In addition, new employees generally require substantial training, which requires significant resources and management attention. Even
if we invest significant resources to recruit, train and retain qualified personnel, there can be no assurances that we will be successful in our efforts.

From time to time, we may be subject to litigation that could result in significant costs to it.

From time to time,
we may be subject to litigation in the ordinary course of business relating to any number or type of claims, including claims for damages related to errors and malfunctions of products and services or their deployment. A securities, product
liability, breach of contract, or other claim could seriously harm its business because of the costs of defending the lawsuit, diversion of employees time and attention, and potential damage to our reputation. Some of our agreements with
customers, suppliers and other third parties contain provisions



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designed to limit exposure to potential claims. Limitation of liability provisions contained in our agreements may not be enforceable under the laws of some
jurisdictions. As a result, we could be required to pay substantial amounts of damages in settlement or upon the determination of any of these types of claims. Although we carry general liability and directors and officers insurance, corporate
insurance may not cover potential claims or may not be adequate to cover all costs incurred in defense of potential claims or to indemnify us for all liabilities that may be imposed.

Government regulations and standards could subject us to increased regulation, increase our costs of operations or reduce our opportunities to earn revenue.

In addition to regulations applicable to businesses in general, we may also be subject to direct regulation by United States governmental agencies,
including the Federal Communications Commission, Department of Defense, Department of Commerce or the State Department. These regulations may impose licensing requirements, privacy safeguards relating to certain subscriber information, or safety
standards, for example with respect to human exposure to electromagnetic radiation and signal leakage. A number of legislative and regulatory proposals under consideration by federal, state, provincial, local and foreign governmental organizations
may lead to laws or regulations concerning various aspects of the Internet, wireless communications and GPS technology, including on-line content, user privacy, taxation, access charges and liability for third-party activities. Additionally, it is
uncertain how existing laws governing issues such as taxation on the use of wireless networks, intellectual property, libel, user privacy and property ownership will be applied to our solutions. The adoption of new laws or the application of
existing laws may expose us to significant liabilities and additional operational requirements, which could decrease the demand for its solutions and increase its cost of doing business. Wireless communications providers who supply us with airtime
are subject to regulation by the Federal Communications Commission, and regulations that affect them could also increase our costs or limit its ability to provide solutions.

Geopolitical, economic and military conditions, including terrorist attacks and other acts of war, may materially and adversely affect the markets on which our common stock trades, the markets in which we
operate, our operations and our profitability.

Terrorist attacks and other acts of war, and any response to them, may lead to armed
hostilities and such developments would likely cause instability in financial markets. Armed hostilities and terrorism may directly impact our facilities, personnel and operations which are located in the United States as well as those of our
customers and suppliers. Furthermore, severe terrorist attacks or acts of war may result in temporary halts of commercial activity in the affected regions, and may result in reduced demand for solutions. These developments could have a material
adverse affect on our business and the trading price of our common stock.

Our stock price is volatile, which may cause you to lose money and could
lead to costly litigation against us and management that could divert corporate resources.

From time to time, stock markets
experience dramatic price and volume fluctuations, particularly for shares of technology companies. These fluctuations can be unrelated to the operating performance of these companies. Broad market fluctuations may reduce the market price of our
common stock and cause you to lose some or all of your investment. These fluctuations may be exaggerated if the trading volume of our common stock is low. In addition, due to the technology-intensive nature and growth rate of our business and the
remote sensor



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integration and monitoring market, the market price of our common stock may rise and fall in response to:



| |  |  | quarterly variations in operating results;
| | - |  | ------------------------------------------



| |  |  | failure to achieve operating results anticipated by securities analysts and investors;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | changes in estimates of the Companys financial performance or changes in recommendations by securities analysts;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | announcements of technological or competitive developments;
| | - |  | -----------------------------------------------------------



| |  |  | the gain or loss of a significant customer or order;
| | - |  | ----------------------------------------------------



| |  |  | disposition of shares of the Companys common stock held by large investors; and
| | - |  | --------------------------------------------------------------------------------



| |  |  | acquisitions or strategic alliances by us or the Companys competitors.
| | - |  | -----------------------------------------------------------------------

When the market price of a companys stock drops significantly, stockholders often institute securities class action lawsuits against that company. A lawsuit against us could cause us to incur substantial costs
and could divert the time and attention of the Companys management and other corporate resources from general business operations.

The
Companys quarterly operating results are subject to fluctuations, and its stock price may decline if the Company does not meet the expectations of investors and analysts.

The Companys quarterly revenues and operating results are difficult to predict and may fluctuate significantly from quarter to quarter due to a
number of factors, many of which are outside its control. These factors include, but are not limited to:



| |  |  | changes in the market for remote sensor integration and monitoring solutions;
| | - |  | -----------------------------------------------------------------------------



| |  |  | delays in market acceptance or implementation of the Companys solutions by customers;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | changes in length of sales cycles of, or demand by, the Companys customers for existing and additional solutions;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | changes in the productivity of the Companys distribution channels;
| | - |  | -------------------------------------------------------------------



| |  |  | introduction of new solutions by us or the Companys competitors;
| | - |  | -----------------------------------------------------------------



| |  |  | changes in the Companys pricing policies or those of its competitors or suppliers;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | changes in the Companys mix of sources of revenues;
| | - |  | ----------------------------------------------------



| |  |  | general economic and political conditions;
| | - |  | ------------------------------------------



| |  |  | wireless networks, positioning systems and Internet infrastructure owned and controlled by others; and
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | any need to migrate to new wireless networks, which could cause the Companys solutions to be incompatible with new wireless networks or become out of date.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------

The Companys expense levels are based, in part, on its expectation of future revenues. Additionally, a substantial
portion of its expenses are relatively fixed. As a result, any shortfall in revenues relative to the Companys expectations could cause significant changes in its operating results from quarter to quarter. We believe period-to-period
comparisons of the Companys revenue levels and operating results are not meaningful. You should not rely on the Companys



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quarterly revenues and operating results to predict the Companys future performance. Its operating results have been, and in some future quarters
operating results may be, below the expectations of public market analysts and investors and, as a result, the price of the Companys common stock may fall.



|ITEM 3. | CONTROLS AND PROCEDURES
|------- | -----------------------

(a) Disclosure Controls
and Procedures. Disclosure controls and procedures are controls and other procedures that are designed to ensure that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required
to be disclosed in the reports that a company files or submits under the Exchange Act is accumulated and communicated to the companys management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.

We maintain disclosure controls and procedures designed to ensure that material information
related to our company is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.

Under
the supervision of our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on this
evaluation, our companys Chief Executive Officer and Chief Financial Officer have concluded that our companys disclosure controls and procedures were not effective as of March 31, 2006, due to certain material weaknesses in internal
control over financial reporting.

The Public Company Accounting Oversight Board has defined a material weakness as a significant
deficiency or combination of significant deficiencies that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. As noted in this report, we
completed our acquisition of Satellite Security Systems, Inc. in a transaction that was accounted for as a reverse merger on December 31, 2006. At the time of the acquisition, Satellite Security Systems, Inc. did not have in place adequate
controls and procedures to detect or prevent material misstatements of its annual or interim financial statements. As of March 31, 2006, Satellite Security Systems, Inc. had not conducted regular quarterly closes of its financial statements for
the fiscal year ended 2005. Accordingly, we were not in a position to provide complete financial statement information as required by Regulation S-B at that time. In addition, as stated above, we incorrectly accounted for the treatment of interest
expense related to the Aston Note.

To address the material weaknesses described above, we have expanded our disclosure controls and
procedures to include additional analysis and other procedures over the preparation of the financial statements included in this report. We retained the independent audit firm of Tauber & Balser, P.C. on January 5, 2006, subsequent to
the year ended December 31, 2005. We also recently hired a new Chief Financial Officer and principal accounting manager.



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Accordingly, our management has concluded that the financial statements included in this report fairly present in all material respects our financial
position, results of operations and cash flows for the periods presented in conformity with generally accepted accounting principles.

We
are not currently subject to the requirements of Section 404 of the Sarbanes Oxley Act of 2002 which requires companies to implement an internal control framework, test and report on the effectiveness of their internal control over financial
reporting. Under current proposals, we will become subject to Section 404 with the Companys annual report for the year ending December 31, 2007. When we begin testing and reporting on the Companys internal controls, we may
discover and be required to report material weaknesses in those controls. In addition, we expect that the evaluation process and any required remediation, if applicable, will increase the Companys accounting, legal and other costs and may
divert management resources from other operating objectives and concerns.

(b) Changes In Internal Controls Over Financial
Reporting. We completed our acquisition of Satellite Security Systems, Inc. effective December 31, 2005. That transaction was accounted for as a reverse merger and resulted in a change in the Companys principal business, bringing in
new financial records, policies and personnel for the quarterly period ended March 31, 2006. The reverse merger also resulted in a change of control of the Company and a change in management, including the appointment of a new Chief Executive
Officer and Chief Financial Officer. These necessary transactions resulted in changes to the Companys internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that has materially affected, or
is likely to materially affect, the Companys internal control over financial reporting.

(c) Limitations On Disclosure Controls
And Procedures. Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or internal controls over financial reporting will prevent all errors or all instances of fraud. A
control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control systems objectives will be met. Further, the design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be
circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events,
and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



SATELLITE SECURITY CORPORATIONBy:

/s/ Mr. John L. PhillipsMr. John L. Phillips Chief Executive OfficerBy:

/s/ Mr. Aidan ShieldsMr. Aidan Shields Chief Financial Officer


Dated: September 22, 2006



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